LONDON, UK – Global equities mostly slid on Thursday on auto sector woes and economic fears about the prospect of more interest rate hikes aimed at cooling high inflation.
Share prices of carmakers were hit hard after Tesla posted tumbling first-quarter profits as steep price cuts ate into margins at Elon Musk’s electric auto company.
Market analyst Patrick O’Hare at Briefing.com said “the reaction to Tesla’s report has cast a pall on the broader market along with some other disappointments.”
Wall Street slid lower, with the Dow down 0.3 percent in late morning trading.
Europe’s main equity markets were mostly lower after a mixed session in Asia.
The dollar fell against its main rivals and crude oil tanked more than two percent.
“In what has been a pretty directionless week so far, European markets are on the back foot as a slide in automakers, and lower oil prices weigh on the wider market,” said Michael Hewson, chief market analyst at CMC Markets UK.
He said oil prices were being dragged down on worries about demand following US data showing companies were facing challenges following the turmoil in the banking sector last month.
Stubbornly high UK inflation and worries over more central bank moves to tame rampant consumer prices had dented market sentiment on Wednesday.
Higher borrowing costs curb consumer spending and ramp up the cost of credit for businesses and individuals alike, derailing economic activity.
“Investors are once again worried about the outlook for the global economy,” added Russ Mould, investment director at AJ Bell.
“Markets have stalled over the past few days, with the latest corporate updates failing to move the dial.”
Carmakers hit the skids-
Shares in Tesla slumped 8.6 percent, but shares in all carmakers took a hit on fears of a price war.
Shares in Ford and GM both dropped more than three percent.
In Europe, shares in French giant Renault lost nearly eight percent despite strong first-quarter earnings, while Stellantis – owner of Chrysler, Fiat, Jeep, Maserati, Peugeot and other brands – sank more than five percent.
In Frankfurt, shares in BMW and Mercedes-Benz both fell more than three percent and Volkswagen dropped 2.5 percent.
“Margins/demand being stuffed is not just Tesla-specific. More price cuts to come affects all,” Finalto analyst Neil Wilson told AFP.
In the telecoms sector, shares in Nokia tumbled more than nine percent after the Finnish telecoms equipment manufacturer reported weaker than expected earnings as cash-strapped consumers reined in spending.
Results from US regional banks were also in focus after three went under last month and troubled European giant Credit Suisse was taken over by UBS.
Several regional US banks – including KeyCorp, Zions Bancorporation and Comerica – fell around five percent each following earnings reports that showed the impact of an industry panic after the March collapse of Silicon Valley Bank.